Tennessee Supreme Court Holds that Health Care Providers Are Subject to Claims Under the Tennessee Consumer Protection Act

May 1, 2020

The Tennessee Supreme Court in a unanimous decision has held that the Tennessee Consumer Protection Act applies to claims arising out of the business aspects of a health care provider’s practice. 

The Tennessee Consumer Protection Act allows a person who has lost money or property because of an unfair or deceptive business practice to sue the entity that engaged in the unfair or deceptive conduct. Roy Franks and Cindy Edwards were injured in separate car accidents and received medical services at Tennova-Dyersburg (previously Dyersburg Regional Medical Center) and Tennova-Martin (previously Volunteer Community Hospital), respectively. Both Franks and Edwards had medical insurance coverage, but the hospitals did not file claims with the health insurance companies. Instead, they filed hospital liens against Franks’ and Edwards’ causes of action for personal injury damages arising from the accidents. The liens were for the full amount of the hospital bills with no reduction for health insurance benefits.

Franks and Edwards sued the hospitals in the Madison County Circuit Court, claiming that the filing of liens for the full amount of the hospital bills with no reduction for health insurance benefits was an unlawful business practice under the Tennessee Consumer Protection Act. The circuit court dismissed the case, finding that there was no legal basis for a claim against the hospitals under the Act. The Court of Appeals affirmed, finding that health care providers were not subject to claims under the Act for actions arising from medical treatment.

In the unanimous opinion, authored by Justice Sharon G. Lee, the Tennessee Supreme Court reversed the Court of Appeals, holding that the Act applies to health care providers and that consumers of medical services such as Franks and Edwards may state a claim under the Act against health care providers for their business practices. Courts in many other states have recognized that there is a distinction between the business aspects of medical practice—for example, advertising and billing—and the actual care and treatment of patients. The Tennessee Supreme Court agreed with those states, finding that a person may state a claim against a health care provider if the claim is based on the provider’s business practices and not on the medical treatment itself.

To read the opinion of the Court in Roy Franks v. Tiffany Sykes, authored by Justice Sharon G. Lee, please visit the Opinions section of TNourts.gov.